Loonie lower as Canada's CPI disappoints, U.S. dollar broadly supported

The U.S. dollar was broadly supported against its main rivals Friday, as positive economic data from the U.S., as well as a surprise China rate cut lent support to the greenback.

USD/CAD gained 0.45% to trade at three-week highs of 1.3152.

Data earlier showed that Canada's consumer price index fell 0.2% in September, compared to expectations for a 0.1% downtick. Year-on-year, consumer prices rose 1.0% last month, disappointing expectations for a 1.1% increase.

Core CPI, which excludes the eight most volatile items, ticked up 0.2% last month, compared to expectations for a 0.3% gain.

The dollar was broadly higher with EUR/USD last trading at 1.1028, down 0.69%. GBP/USD dipped 0.32% to 1.5352.

The safe-haven yen was also lower with USD/JPY was last seen at 121.20, up 0.42%.

The greenback strengthened broadly after China's central bank cut interest rates for the sixth time since November in another attempt to jumpstart the slowing economy. The Chinese central bank cut its one-year deposit rate by 25 basis points to 1.5%. The PBOC lowered its one-year lending rate by 25 basis points to 4.35%.

On Thursday the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending October 17 increased by 3,000 to 259,000 from the previous week’s total of 256,000. Analysts had expected jobless claims to rise by 9,000 to 265,000. It was the 33rd straight week that claims were below the 300,000 threshold, which is normally associated with a firming jobs market.

In a separate report, the U.S. National Association of Realtors said that existing home sales rose by 4.7% to 5.55 million units last month from 5.30 million in August. Economists had expected existing home sales to climb 1.4% to 5.38 million units in September.

The shared currency was lower (despite upbeat data from the eurozone released Friday), as ECB President Mario Draghi signaled Thursday that the central bank will "reexamine" its monetary policy in December, hinting at the possibility for further easing measures.

Earlier Friday, research group Markit said that Germany's preliminary manufacturing purchasing managers' index ticked down to 51.6 this month from 52.3 in September, while the services PMI rose to 55.2 from 54.1.

In France, the preliminary manufacturing PMI came in at 50.7 in October, up from 50.6 the previous month, while the services PMI climbed to 52.3 from 51.9.

For the euro area, Markit said the composite PMI, which includes both manufacturing and service sector activity, hit 54.0 in October from 53.6 the previous month.